What Would Newt Do on Taxes?

Republican presidential candidate Newt Gingrich’s tax proposals have gotten relatively little attention, although they would mean major changes to the tax code. Now there’s an analysis from the nonpartisan Tax Policy Center, which is based in Washington.

In general, say the analysts, the former House speaker’s individual flat tax would offer an optional alternative tax system. It would have a single 15% tax applied to income similar to what’s in current law, with several big changes:

l. Capital gains, dividends and interest income would not be taxable.

2. Taxpayers could claim a standard exemption of $12,000 for each individual and dependent.

3. The plan would eliminate the standard deduction and most itemized deductions and credits, except the mortgage-interest deduction, the charitable deduction, and the child and earned-income tax credits.

4. The plan would repeal the alternative minimum tax.

Gingrich would also permanently repeal the federal estate tax and the taxes in Obama’s health-care plan law, including the 3.8% tax on investment income.

According to the analysis, the plan doesn’t make clear whether taxpayers could switch back and forth from the current tax system to the alternative flat tax.

Many other details remain unclear, making it difficult to judge the revenue impact of the Gingrich tax proposals. However, the Tax Policy Center believes “the Gingrich plan would reduce federal tax revenues dramatically,” perhaps cutting federal revenues by 35% in calendar year 2015.